How CBDCs can democratise banking and improve financial health

Central bank digital currencies are often used to pay salaries during the initial stages of implementation and as early use cases. While the sand dollar in the Bahamas was the first use of a CBDC for payroll in 2021, the deputy prime minister of Ukraine announced in January 2023 that Ministry of Digital Transformation staff would receive salaries in CBDC once the currency was implemented. And from May 2023, Changshu, a city of 1.5m people in eastern China, will pay public employees and government workers with the digital renminbi.

Alongside CBDC distribution through welfare, lotteries or giveaways for early adopters, paying public wages in CBDCs could be the first step of rolling out a CBDC adoption initiative. People who receive a CBDC in their digital wallets would be more likely to continue using it for payments.

But there should be practical benefits that encourage people to use CBDC in day-to-day life and that improve people’s financial health. By ‘financial health’, we mean factors that can influence an individual or organisation’s financial well-being, such as saving habits, managing debts or use of financial services ranging from investments to insurance.

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